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Fear, Trembling and Blunt Instruments

It seems that someone at Remain headquarters has decided that the only useful weapon available to those who want to avoid Brexit is the blunt instrument of fear. Yesterday George Osborne put forward the Treasury’s view that GDP will be ‘six percent lower’ in 2030 if Britain leaves the EU and families will be on average ‘4,300 pounds poorer’.

And this is how BBC News reported it at first, only in later bulletins adding ‘than would otherwise be the case,’ because, of course, the Treasury doesn’t mean ‘poorer than now‘, or ‘total GDP smaller than now‘. Rather, they mean ‘poorer than we would otherwise be‘ and ‘smaller than it would otherwise be.‘ Without that qualification, Brexit sounds alarming indeed.

But even so, it’s a very contentious claim. Have we ever been able to trust Treasury, EU, IMF or Word Bank economic projections for 14 years ahead? Who’s to say what busts and booms, dotcom or subprime, will trip up the world economy between now and then. What about natural disasters, or global warming? It’s speculative crystal ball gazing. No one can look that far ahead with any confidence.

In any case, consider these calculations:

Average real UK GDP growth over the last 60 years has been 2.47%. Projecting the same rate forward we can expect the economy to be nearly 41% larger in 2030 than now. Even if the economy is six percent ‘smaller’ it will still be nearly 35% larger.

The UK’s average salary has risen by about 2.96% a year over the last sixty years. Projecting forward to 2030, we might expect the average salary to rise from around 26,500 to 39,900 GBP. Even if the average family (I take that to mean two adults on an average salary) is 4,300 GBP ‘poorer’ the same family will be richer by 22,500 GBP.

Overall, I find the economic arguments petty and confusing. Frankly, I think no one really knows what the impact of Brexit might be, short term, medium term or long term, local or global. I am swayed one way or the other by whoever is currently pontificating on the subject. But one thing is clear – everyone seems to have decided that it’s the only topic worth arguing about. So Remain paints a picture of catastrophe, and Leave talks up the economic freedom we will enjoy on Brexit. No one really knows, but no one talks about the other, more important, benefits of Remain.

I’m very definitely for Remain, and not because of any economic arguments one way or another. I’m an admirer of supranational European values and justice (admittedly a work in progress). I’m also for radical reform, for more obvious democracy, less corruption and less waste. I’m also for expansion eastwards to include Ukraine, Moldova and Turkey, perhaps even Russia (post-Putin!). Europe has kept the peace for 70 years and established an admirable and increasingly comfortable way of life for hundreds of millions of citizens. I’ve seen former Soviet bloc nations embrace and enjoy nearly everything that Europe stands for. And if Europe is to continue to play a significant role on the world stage in the decades to come, as China rises, it would be better if we were to stay together. It’s not just about Britain. Brexit will damage whatever survives of the EU.

Everything depends on how you put things, and journalists are sometimes slow to understand the implications of, and the assumptions behind apparently simple statements. There was another report on the BBC website that annoyed me yesterday – Three Day Working Week ‘optimal’ for Over 40s. It explains that researchers in Australia have found that part-time workers over 40 do better in intelligence tests than full-time workers over 40.

It was bad reporting because the writer doesn’t challenge the obvious question (which, I hope at least the original researchers have considered) – isn’t it the case that those who choose part-time work are more intelligent, have pursued more lucrative careers and therefore possess the economic resources that enable them to go part-time? It needn’t, surely, be the part-time work that is ‘causing’ their greater intelligence.